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[2014] ZAWCHC 52
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Van Zyl N.O. and Another v Kaye N.O. and Others (1110/14) [2014] ZAWCHC 52; 2014 (4) SA 452 (WCC) (15 April 2014)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION)
Case
No: 1110/14
DATE:
15 APRIL 2014
REPORTABLE
Before: The Hon.
Mr Justice Binns-Ward
In the matter
between:
THOMAS
CHRISTOPHER VAN ZYL
N.O.
............................................
First
Applicant
NOMACHULE
OLIPHANT
N.O
..........................................................
Second
Applicant
(in their
capacity as provisional trustees of
the insolvent
estate of Denis Henry Kaye)
And
BERNICE KAYE
N.O
............................................................................
First
Respondent
IGOR VUKIC
N.O.
............................................................................
Second
Respondent
(First and Second
Respondents cited in their
capacity as
trustees of the JGN Trust, T618/1993)
AND SEVEN OTHER
RESPONDENTS
.............................
Third
- Ninth Respondents
JUDGMENT
DELIVERED: 15
APRIL 2014
BINNS-WARD
J:
[1]
The applicants, who are the provisional
trustees of the insolvent estate of Denis Henry Kaye (‘Kaye’),
have applied
for orders declaring that two immovable properties, one
in Constantia, Cape Town, and the other in Plettenberg Bay, or the
proceeds
of any sale of such properties, may be treated as assets in
the insolvent estate. The Cape Town property is registered in
the name of the JGN Trust (‘the Trust’) and the
Plettenberg Bay property as the property of a company, Bella Densel
176 (Pty) Ltd. The two properties are the only assets of the
Trust and the company, respectively. The trustees of the
Trust
have been joined as the first and second respondents in the
application. The company is the fifth respondent.
The
applicants seek the invocation by the court of its power under the
common law to disregard ‘the veneer’ of the
Trust, or ‘go
behind’ it, for the relief sought in respect of the Cape Town
property. They rely on the provisions
of
s 20(9)
of the
Companies Act 71 of 2008
[1]
for the relief sought in respect of the
Plettenberg Bay property.
[2]
The insolvent estate is the subject of a
final order of sequestration, but there has not yet been a first
meeting of creditors and
final trustees have thus not yet been
appointed. The applicants have thus also applied
pari
passu
, in terms of
s 18(3)
of the
Insolvency Act 24 of 1936
, for authorisation to bring the
proceedings.
[3]
The Cape Town property has been sold by the
Trust to the fourth respondent and transfer to the purchaser is
pending. The Plettenberg
Bay property is the subject of a
pending sale in execution. Merchant Commercial Finance (Pty)
Ltd, trading as Merchant Factors,
which was joined as the sixth
respondent, holds security bonds over both properties. There is also
an application for an interim
interdict prohibiting the firm of
attorneys appointed to attend to the transfer of the Cape Town
property (the third respondent)
from paying any of the proceeds of
the sale to the Trust, or to Merchant Factors. The interim
prohibitory interdict is sought pending
the determination of an
application that the applicants might bring to have the registration
of the mortgage bond over the Cape
Town property set aside as a
voidable disposition in terms of the relevant provisions of the
Insolvency Act on
the basis of having been an allegedly collusive
transaction.
[4]
It is conceded by the applicants that they
will have standing to impeach the mortgage bond transactions only if
they succeed in
obtaining the declaratory relief described in para 1,
above. In other words, the contemplated impeachment of the
mortgage
contracts would be predicated on the treatment of the
dispositions concerned as dispositions by Kaye of
his
property, rather than as dispositions
by the Trust and the company, respectively, of
their
property. Their standing to obtain interim relief against
Merchant Factors must necessarily rely on the same premise.
[5]
Merchant Factors moved to meet the
application, insofar as the interdictal relief against it was
concerned, by tendering an irrevocable
undertaking that should any
court of final instance set aside the mortgage bonds registered in
its favour over the immovable properties,
it would repay any amount
that it had received from the Trust or the company pursuant to the
realisation of its security.
The tender was refused by the
applicants, who indicated that they were prepared to accept it only
upon additional terms that were
unacceptable to Merchant Factors.
[6]
Some background facts are needed to
contextualise the application. Kaye had been the sole director
of a company called Sarepta
Trading (Pty) Ltd, which was a wholly
owned subsidiary of Seamo Investments 35 (Pty) Ltd, of which Kaye and
his wife had been the
directors. Kaye had stood surety for
Sarepta’s debts to Kempston Finance, which was the entity that
had sequestrated
Kaye’s estate and obtained a winding up order
against Sarepta. An enquiry into the affairs of Sarepta has been
established
in terms of ss 417 and 418 of the Companies Act 61
of 1973. The evidence led thus far at the enquiry provided the
foundation
for the applicants’ case in the current proceedings;
more particularly, that given by Kaye, Mrs Kaye and an attorney, Mr
Igor Vukic, concerning how the affairs of the Trust and Bella Densel
were managed. Merchant Factors contends that the evidence
is
inadmissible for the purpose the applicants seek to employ it.
I shall elaborate on that aspect of the matter presently.
[7]
The Trust is a so-called ‘family
trust’. It was founded for the purposes of acquiring and
holding the Cape Town
property, which has served as the Kayes’
family home since 1994. The current trustees are Kaye’s
wife and an
attorney. Prior to his sequestration, Kaye had also
been a trustee. Mr Anthony Cotterell, the managing director of
Kempston
Finance, who made a supporting founding affidavit in the
application, had become a co- trustee of the Trust shortly after its
establishment
and he retained that capacity for several years.
Cotterell had also stood surety for the Trust in favour of the Board
of
Executors, which had provided mortgage finance to the Trust for
the acquisition of the Cape Town property. Kaye testified
at
the enquiry that he had paid the bond repayment instalments
personally.
[8]
The beneficiaries of the Trust are Mr and
Mrs Kaye and their descendants. In terms of clause 9.11 of the
trust deed, the trustees
of the Trust are empowered to guarantee
debts owing by any party ‘
provided
that such party is a beneficiary or a corporation or undertaking in
which the Trust and/or one or more beneficiaries have
a direct or
indirect interest which in the opinion of the Trustees is material
’.
[9]
The shares in Bella Densel are owned by
another trust of which Kaye, his wife and Vukic had been the trustees
until Kaye’s
sequestration. Kaye had been the sole
director of the company, and, according to his evidence at the
Sarepta enquiry, it
was being arranged that his wife would replace
him in that capacity. He admitted at the enquiry that, as his
replacement
as director, his wife would probably ‘do his
bidding’.
[10]
Kaye’s evidence at the Sarepta
enquiry concerning the circumstances in which the mortgage bonds in
favour of Merchant Factors
had come to be registered was far from
clear. He testified that the Trust had agreed to the
registration of a mortgage bond
over the Cape Town property in favour
of Merchant Factors to provide security for a loan extended by the
latter to Sarepta for
the purpose of acquiring the shares in Sarepta
held by Cotterell or the entities which Cotterell represented, and
for which the
Trust had undertaken a suretyship obligation.
According to Kaye there had also previously been a bond registered
over the
Cape Town property in favour of Equicap, apparently a
subsidiary of Rand Merchant Bank. The bond had provided
security in
respect of a loan by Equicap to Sarepta. The funds
borrowed by Sarepta had been applied for the benefit of Taxi Trucks
Logistics
(Pty) Ltd, another business entity controlled by Kaye.
Merchant Factors had subsequently advanced funds to Sarepta to settle
Equicap’s claim. This resulted in the cancellation of the
bond in favour of Equicap and the registration of a further
bond in
favour of Merchant Factors.
[11]
In its answering papers, however, Merchant
Factors gave a detailed account of its dealings with Sarepta and the
other entities controlled
by Kaye. The account had been
furnished previously in Merchant Factors’ answering affidavit
in pending litigation in
case no. 16211/13, in which Kempston
Finance, litigating in the name of the liquidators of Sarepta, has
applied, in terms
of s 31 read with
s 32(1)(b)
of the
Insolvency Act, to
have a disposition by Sarepta to Taxi Trucks
Logistics (Pty) Ltd, in which Merchant Factors is alleged to have
played a fraudulently
collusive role, set aside. Merchant
Factors’ answering affidavit in that matter was annexed to its
answering affidavit
in the current matter, and the relevant part
thereof, which set forth Merchant Factors’ account of the
history of its transactions
with Sarepta, Kaye, Seamo Investments 35
(Pty) Ltd, Wellpick Properties (Pty) Ltd, Taxi Trucks Logistics, the
Trust and Bella Densel,
was incorporated by reference into its
answering affidavit in the current matter. It would unduly
burden this judgment to
go into the detail. Suffice it to say
that the account is unrebutted and on its face records what appear to
be
bona fide
arms’ length business transactions with Merchant Factors.
The mortgage bonds registered over the two immovable properties
in
issue appear from that account to have been registered to provide
security for Merchant Factors’ exposure qua creditor
of Sarepta
and Taxi Trucks Logistics in terms of the principal transactions
between Merchant Factors and those companies.
The
Trust and Bella Densel had stood surety for the principal debtors in
those transactions. There has been no suggestion
that Sarepta
and Taxi Trucks Logistics are not corporations in which Kaye could
properly be said to have a ‘direct or indirect
interest’
in the sense contemplated by clause 9.11 of the Trust’s trust
deed.
[2]
[12]
Kaye also admitted at the enquiry that he
had paid certain expenses in respect of the upkeep of the Plettenberg
Bay property.
He conceded that these would have resulted in
Bella Densel being indebted to him in the amounts concerned, but
stated, opaquely,
that these loans were ‘consolidated’ in
the loan accounts of Seamo Investments.
[13]
The evidence adduced at the Sarepta enquiry
- to the limited extent that it is comprehensible without insight
into all the accounting
records concerned – suggests that
financial transactions might have been recorded in the books of the
various entities over
which Kaye exercised control in a manner that
did not result in a correct or accurate representation of the flow of
funds.
So, for example, it was not apparent, and Kaye was
unable to explain, why the Trust’s financial statements for the
year ended
28 February 2011 reflected
him
to be indebted to the Trust in the sum of nearly R3 million.
It is not necessary to go into the detail, but it is apparent
from an
analysis by a chartered accountant commissioned for the purpose by
Merchant Factors’ attorneys, a copy of which was
annexed to
Merchant Factors’ answering papers in the current matter, that
the accounting records of the Trust do not bear
scrutiny. It is
also apparent that the accounting records of the Trust and the
company show that their finances were accounted
for as if they were
part of a group of business entities over which Kaye had apparently
effective personal control.
[14]
The essence of the applicants’
case in respect of the main relief is articulated in paragraph 13 of
the founding affidavit
as follows:
In this
application, the applicants essentially seek to “
look
behind
” the
Trust and Bella Densel and to “
lift
the veil
” so
as to give effect to the true situation namely that the Trust and
Bella Densel have at all times been nothing more than
the
alter
egos
of Kaye and
wholly under his control and have acted at all material times solely
according to his whim. In the result, the
applicants contend
that the assets of the Trust and Bella Densal fall to be regarded as,
and incorporated into his insolvent estate
to be utilised for
distribution to his general body of creditors, according to the legal
order of preference.
[3]
[15]
The undisguised object of the application,
insofar as ‘going behind’ the Trust is concerned, is to
obtain standing to
apply for the setting aside as a voidable
disposition of the transaction in terms of which the Trust’s
asset was mortgaged
in favour of the sixth respondent. In order
to achieve that end the Cape Town property must fall to be regarded
as an asset
not of the Trust, but of Kaye’s personal estate in
insolvency. The only ways in which that object can be achieved
are
by showing that the Trust should be treated as a sham; in other
words, declared to be non-existent, or by showing that as a matter
of
fact the property did not vest in the Trust.
[4]
If the Trust were a sham, the original trustees would be seen
as having acquired the Cape Town property as agents of Kaye,
and it
would thus have been acquired for him as their principal.
[16]
Indeed, the applicants’ approach
renders it necessary to highlight that establishing that a trust is a
sham and ‘going
behind the trust form’ entail
fundamentally different undertakings.
[5]
When a trust is a sham, it does not exist and there is nothing
to ‘go behind’. In my view, the applicants
have
confused and conflated the concepts in their founding papers.
As I shall endeavour to explain, ‘going behind’
the trust
is not an available remedy on the alleged facts.
[17]
The purpose of establishing the Trust was
plainly so that the Kayes’ family home could be held separately
from Kaye’s
personal estate. As a matter of financial
prudence and estate planning there was nothing untoward about that.
Indeed,
the wisdom of making such a provision was highlighted by the
fact that Kaye was an unrehabilitated insolvent at the time.
There was also nothing exceptionable about Kaye personally paying the
mortgage bond debt and maintenance expenses in respect of
the
property held in the Trust. That these advances to the trust
were not accounted for properly, resulting in a purported
loan
account in one of the companies controlled by Kaye, rather than in
the accounts of the Trust, as obviously should have been
the case,
affords no reason to disregard the Trust. All that it does is
call into question the fitness of the trustees to
hold office, and
possibly also the quality of the professional accounting services of
which they availed. The incorrect allocation
of Kaye’s
claims against the Trust does not prevent the applicants, as trustees
of his insolvent estate, from pursuing them
against the actual
debtor. The applicants are entitled to act on the true state of
affairs. They are not bound by incorrectly
stated accounts.
[18]
The allegedly delinquent discharge by
trustees of their responsibilities in the current case, thereby
allegedly giving Kaye sole
and unfettered
de
facto
control of the Trust’s
asset, gave rise to the accusation by the applicants in their
founding papers that the trust was a
‘sham’. While
the description is understandable in loose terms, it lacks cogency in
a legal sense in the face
of the valid creation and continued
existence of the trust. The maladministration of an asset
validly vested in a properly
founded trust does not afford a legally
cognisable basis to contend that the trust does not exist, or that
the asset no longer
vests in the duly appointed trustees. Thus,
for the applicants to be able to establish that the Cape Town
property does not
vest in the Trust they have to prove that the Trust
was a sham.
[19]
Holding that a trust is a sham is
essentially a finding of fact. Inherent in any determination
that a trust is a sham must
be a finding that the requirements for
the establishment of a trust were not met, or that the appearance of
having met them was
in reality a dissimulation.
[6]
[20]
There is no reason to hold, and it was not
contended by the applicants, that the Trust had not been legitimately
founded, or that
the Cape Town property had not been validly vested
in it.
[7]
Significantly, Mr Cotterell, who made a supporting founding affidavit
in the application, and who, it will be recalled, was
a trustee of
the Trust for about ten years from soon after its establishment, did
not suggest that he had been party to a sham,
or that upon assuming
office he had not in fact taken joint ownership of the Cape Town
property qua co-trustee.
[21]
Going behind the trust form, on the other
hand, entails accepting that the trust exists, but disregarding for
given purposes the
ordinary consequences of its existence. This
might entail holding the trustees personally liable for an obligation
ostensibly
undertaken in their capacity as trustees, or holding the
trust bound to transactions ostensibly undertaken by the trustees
acting
outside the limits of their authority or legal capacity as
such; cf.
Van der Merwe NO v Hydraberg
Hydraulics CC
and
Others
.
[8]
Those cases will generally be manifested by trustees seeking,
usually dishonestly, to use their formal non-compliance with
the
terms of the trust deed opportunistically to evade liability to a
third party. Such cases are most likely to present
in the
context of an absence of the dichotomy between responsibility and
interest that constitutes the ‘core idea’
of the legal
concept of a trust;
[9]
in other words, in a context in which the trustees treat the property
of the trust as if it were their personal property and use
the trust
essentially as their
alter ego
– an all too frequent phenomenon in certain family and business
trusts in which the trustees are both the effective controllers
as
well as the beneficiaries.
[10]
The remedy might entail the making of a declaration that a
trust asset shall be made available to satisfy the personal liability
of a trustee, but it does not detract from the character of the asset
as one of the trust and not that of the trustee; the existence
of the
trust remains acknowledged.
[22]
Going behind the trust form (or ‘piercing
its veneer’, as the concept is sometimes described) essentially
represents
the provision by a court of an equitable remedy to a third
party affected by an unconscionable abuse of the trust form. It
is a remedy that will be afforded in suitable or appropriate cases.
The notion of the provision of such a remedy has been
postulated as a
desirable development in our law; see
Parker
.
[11]
I suspect that, rather like the position with ‘piercing of the
corporate veil’ in the case of companies, closely
defining the
applicable principles in the cases in which it is afforded or
withheld may prove elusive. That is why I consider
it
appropriate to describe it as an equitable remedy in the ordinary,
rather than technical, sense of the term; one that lends
itself to a
flexible approach to fairly and justly address the consequences of an
unconscionable abuse of the trust form in given
circumstances.
It is a remedy that will generally be given when the trust form is
used in a dishonest or unconscionable manner
to evade a liability, or
avoid an obligation.
[23]
I am not aware of any matter in which a
South African court has yet ‘pierced the veneer’ of a
trust or gone behind it,
although the court came close to doing so in
Van der Merwe
.
[12]
The applicants’ reliance in support of their approach on
the Supreme Court of Appeal’s judgment in
Badenhorst
v Badenhorst
[13]
is misplaced.
Badenhorst
did not entail any disregard by the court of the trust involved in
that case.
[24]
The issue in
Badenhorst
was a just and equitable distribution
of assets between spouses in terms of
s 7(3)
of the
Divorce Act
70 of 1979
.
[14]
Mr Badenhorst had contended with success before the trial court in
his wife’s action for a divorce that no regard should
be had
for that purpose to the value of the assets held in a trust that he
had caused to be founded and over which he was able
to exercise full
control. Having regard to the control that Mr Badenhorst
enjoyed over the trust in question, as well as
the circumstances in
which it had been founded and the manner in which it was managed, the
appeal court considered that it would
be just and equitable to have
regard to the value of the trust’s assets for the purposes of
determining the amount of the
contribution by way of a monetary
payment, rather than a transfer of assets, that he should have to
make to Mrs Badenhorst upon
the termination of their marriage by
divorce. The effect of the court order was not to hold that the
trust was a sham, or
to make the assets of the trust the property of
Mr Badenhorst. The court also did not go behind the trust
form.
The decision in
Badenhorst
went to the application of
sub-secs 7(3)-(5) of the
Divorce Act,
[15
]
rather than to any remedy for abuse of the trust form. It was
left to Mr Badenhorst to decide how to make payment in
terms of
the court order. The judgment did not go against the trust, or
render its assets exigible at the instance of Mrs
Badenhorst.
[16]
(However, if I am wrong in my analysis of the judgment in
Badenhorst
,
and the court did indeed go behind the trust in that matter, it would
seem that it did so on the premise of the respondent’s
resort
to the trust’s existence in that case as an unconscionable
means to evade the obligations attendant on the dissolution
of his
marriage. On any approach the case remains distinguishable from
the current matter.)
[17]
[25]
Much was made by the applicants of the
allegation that the Trust was Kaye’s ‘alter ego’,
in the sense that he
dealt with the Trust’s property as if it
were his own and that his two co-trustees were merely his puppets.
The applicants
sought substantiation for these allegations in the
answers given by Kaye and his erstwhile co-trustees at the
aforementioned
s 417
enquiry into the affairs of Sarepta.
They identified the particular extracts from the transcript of
evidence at the enquiry
on which they relied in a supplementary
founding affidavit filed before the respondents had delivered their
answering papers.
I must say that on my reading of the
transcript the evidence did not carry the unequivocal effect that the
applicants sought to
attribute to it.
[26]
But, in any event, as mentioned, the first,
second and sixth respondents objected to the admissibility of the
evidence adduced at
the enquiry proceedings on the basis, amongst
other reasons, of its hearsay character. Their objection gave
rise to an application
by Merchant Factors to strike out significant
portions of the applicants’ papers. The applicants
responded by applying,
in terms of
s 3(1)(c)
of the
Law of
Evidence Amendment Act 45 of 1988
, for the admission of the
transcript of the entire evidence given by Kaye, his wife and Vukic
at the enquiry as evidence in the
main application. The
applicants’ counsel (Mr
Mundell
SC, assisted by Ms
Davis
)
conceded that if this evidence were not to be admitted, the main
application could not succeed.
[27]
I shall deal with the Evidence Act and
striking out applications presently, but it seems to me that even
assuming in favour of the
applicants that the evidence should be
admitted, it does not support the relief sought. An
ex
hypothesi
consideration of the case on
this basis is useful because the matters to which I would need to
have regard in considering the application
for the admission of the
evidence include, amongst others, the nature of the evidence, the
purpose for which it is tendered and
its probative value. The
ultimate conclusion required for the admission of the evidence is
that it would be in the interests
of justice to admit it.
[28]
The expressions ‘alter ego trust’ and
‘sham trust’ are often used interchangeably and with
confusing effect.
So, for example, I think it is reasonably
clear in
Rees and Others v Harris and
Others
2012 (1) SA 583
(GSJ) that when
the court weighed whether to hold that the Aljebami trust had been
proven by Harris to be Rees’s ‘alter
ego’, it was
actually considering whether the evidence had established that the
trust was a sham. The lack of clarity
concerning the effect of
the use of the expressions is not peculiar to this jurisdiction.
It was discussed by Robertson J
in the New Zealand Court of Appeal’s
judgment in
Official Assignee v
Wilson
,
[18]
where the learned judge, having observed that two earlier New Zealand
High Court judgments had employed the expressions without
making the
distinction ‘if any’ between the concepts apparent, went
on to point out that the notion of ‘alter
ego’ trusts
appeared to have been received into New Zealand jurisprudence from
Australia, where, in matrimonial cases, the
courts ‘looked
through’ trusts for the purposes of making property
distribution orders in cases in which a spouse’s
de
facto
control of a trust was held to
have overridden the discretion of the trustees and made the trust
property ‘in reality’
the
de
facto
property of the controller.
Robertson J held that while that approach might be supportable in the
context of s 79 of
Australia’s Family Law Act 1975 (Cth),
it was not borne out by common law principles. He concluded:
[69]
The assumption of factual control by someone
other than a trustee (or a sole trustee if there is more than one
trustee) or by someone
without legal right to exercise such power
cannot of itself invalidate a trust. As noted by Jessica Palmer
[
Dealing with the Emerging Popularity of Sham Trusts
[2007] NZ Law Rev 81]
at 89:
The
alter ego, as factual control, should be an impotent, meaningless
concept. In the eyes of the law, factual control has no effect
on
legal ownership. Indeed a stranger who takes control of trust assets
will be considered a trustee
de son tort
and be liable to
account for the property of beneficiaries. Factual control of trust
property cannot justify recognition that the
controller thereby owns
the trust assets.
...
The
alter ego concept, as it relates to factual control, serves to
attribute an individual’s actions to those of the organisation
that he is controlling. It is not a mechanism whereby an individual
can appropriate property to him or herself by virtue of the
control
that he or she exercises.
[70]
Actual control alone does not provide justification for looking
through/invalidating a trust. The uptake of control by someone other
than an authorised person cannot be sufficient to extinguish the
rights of the beneficiaries under a trust. It is difficult to
see the
alter ego trust operating in New Zealand as an independent cause of
action.
[71]
Factual control of a trust by someone other than those authorised
to have such power is not an irrelevant consideration. Such control
may give rise to a claim for breach of trust. Evidence of such
control may be relevant to the question of whether a trust is a
sham
in that it may evidence a lack of true intention to form a trust.
That is not to say that an alter ego trust is the same as
a sham. A
finding of effective control may help establish that a trust is a
sham if it indicates that it was not intended that
the trust take
effect according to its terms. To establish a sham, the intention to
mislead must be shown to have existed from
the inception of the trust
(or from the time when particular property was disposed to the
trust). Evidence of effective control
of the trust post settlement
may be used to infer the requisite intention.
[72]
We are satisfied that Chisholm J’s treatment of the alter
ego trust argument was correct. Alter ego trusts are not an
independent
cause of action, nor are they the same as shams. In the
trust context, alter ego arguments are confined to evidence to help
establish
a sham, which is how he treated the matter.
In my view (and astute to the difference
between our law and that of England and New Zealand concerning the
character of the interest
of beneficiaries in trust property), these
conclusions hold equally true in the South African legal context.
Indeed, the
learned judge’s observations at para 71 of his
judgment are entirely consonant with the views expressed by
Cameron JA
in
Parker
at para 37.3.
[19]
[29]
Even if it were to be accepted that Kaye
administered the Trust without proper regard to his fiduciary duties
and in a sense treated
it as his ‘alter ego’, that does
not, in itself, make the trust a sham. It might have given cause for
Kaye’s
removal from office as a trustee, or the appointment by
the Master of an independent co-trustee,
[20]
and it might render Kaye personally liable for transactions concluded
by him ostensibly on behalf of the Trust, or even delictually
liable
to the beneficiaries, but the evidence as to his alleged conduct does
not vest a claim against the Trust in the applicants,
nor does it
give them a right, qua trustees of Kaye’s insolvent estate, to
ownership of the Trust’s asset. In
short, the evidence
does not derogate from the fact that the Cape Town property is that
of the Trust, not Kaye; nor does it show
that Kaye has used the Trust
to evade any obligation that the applicants or Kaye’s creditors
might, or should be able to,
enforce. If Kaye’s estate
does have a claim against the Trust, as would appear to be quite
likely, it is for the applicants
to pursue it. If the claim is
not satisfied, they might consider sequestrating the Trust, and only
then, and if the facts
justify such a course, would the voidable
disposition remedies be available to them.
[30]
In my judgment, the applicants’
attempt to go behind the Trust in the circumstances has been
misconceived. They have
not shown that the Trust was used
dishonestly or unconscionably to evade a liability to them or Kaye’s
creditors. As
explained earlier, in the factual context of the
case, they could succeed in obtaining the relief they sought, which
in reality
had nothing to do with piercing the Trust’s veneer
or going behind it, only by showing that it was a sham or that the
fixed
property had not really been vested in the Trust. They
failed to do either of these things.
[31]
Similar considerations apply in respect of
the application concerning Bella Densel’s property. The
fact that the application
in this connection is expressly founded on
s 20(9) of the
Companies Act 71 of 2008
implicitly entails an
acceptance by the applicants that the Plettenberg Bay property
properly vests in the company.
[32]
Section 20(9)
provides:
If, on
application by an interested person or in any proceedings in which a
company is involved, a court finds that the incorporation
of the
company, any use of the company, or any act by or on behalf of the
company, constitutes an unconscionable abuse of the juristic
personality of the company as a separate entity, the court may-
(a)
declare that the company is to be deemed not to be a juristic person
in respect of any right, obligation or liability of the company or of
a shareholder of the company or, in the case of a non-profit
company,
a member of the company, or of another person specified in the
declaration; and
(b)
make any further order the court considers appropriate to give effect
to a declaration contemplated in paragraph (a)
In
Ex
Parte Gore and Others NNO
[21]
it was held that the provision was supplemental
to, rather than substitutive of the common law. It has been
accepted generally
that the approach at common law has not been
clearly defined, but its essence is, I think, captured in the
following dictum of
Corbett CJ in
The
Shipping Corporation of India Ltd v Evdomon Corporation and Another
:
It seems
to me that, generally, it is of cardinal importance to keep distinct
the property rights of a company and those of its
shareholders, even
where the latter is a single entity, and that the only permissible
deviation from this rule known to our law
occurs in those (in
practice) rare cases where the circumstances justify ''piercing'' or
''lifting'' the corporate veil. And in
this regard it should not make
any difference whether the shares be held by a holding company or by
a Government. I do not find
it necessary to consider, or attempt to
define, the circumstances under which the Court will pierce the
corporate veil. Suffice
it to say that they would generally have to
include an element of fraud or other improper conduct in the
establishment or use of
the company or the conduct of its
affairs
.
[22]
As stated in
Gore
,
[23]
s 20(9) of the 2008
Companies Act ‘brings
about that a remedy can be provided whenever the illegitimate use of
the concept of juristic personality adversely affects a third
party
in a way that reasonably should not be countenanced’.
[33]
The applicants have failed to show that the
company was used in a manner that constituted an unconscionable abuse
of its corporate
personality. The fact that it may have been
controlled by Kaye and that its property was consequently used to
secure the
obligations of other companies in which Kaye had a
controlling interest did not constitute an abuse of Bella Densel’s
corporate
personality. There is no evidence, even if one takes
account of the parts of the record of the
s 417
enquiry
proceedings on which the applicants rely, to indicate that there was
anything unconscionable or fraudulent about the company
encumbering
its property in favour of Merchant Factors to provide security for
the performance of its contingent obligation under
the suretyship it
had given in respect of the former’s claims against Sarepta.
The fact that a person, such as a shareholder
or a director, might
have full and effective control over a company affords no basis, by
itself, to disregard the separate personality
of the company; cf.
Nel
and Others v Metequity Ltd and Another
.
[24]
[34]
I find accordingly that on any approach the
applicants are not entitled to the primary relief that they have
sought in the current
application. It follows that they have
not established any right, even
prima
facie
, amenable to protection by
interim interdictal relief against Merchant Factors. In the
latter regard, I might mention that
even had the applicants satisfied
the requirement of establishing a right in the relevant sense
necessary to obtain interim interdictal
relief, I should nevertheless
probably have declined to grant an interim interdict. In the
context of the sixth respondent’s
tendered undertaking
[25]
and its evidently undisputed ability easily to meet any claim that
the applicants might be able to assert to repayment of any money
paid
to the sixth respondent, qua mortgagee, from the proceeds of the
fixed properties concerned, it seems unlikely, were the interdicts
denied, that the applicants would have been exposed to irreparable
harm. There is also the consideration that the furthest
the
applicants were able to take their case on the papers was that, if
vested with the necessary standing to do so, they would
explore the
possibility
of having the mortgage contracts set aside as voidable dispositions.
They were unable to even attempt a demonstration of
any probability
of success in the vaguely mooted proceedings to avoid the
dispositions. That would have afforded a further
consideration
weighing against the exercise of the court’s discretion in
their favour.
[35]
As mentioned, however, the opposing
respondents contended that the application should fail because most
of the evidence upon which
the applicants had purported to rely was
inadmissible, being derived from the transcript of proceedings at the
Sarepta enquiry.
The respondents relied on the appeal court’s
decisions in
O'Shea NO v Van Zyl NO and
Others
[26]
and
James Brown &
Hamer (Pty) Ltd v Simmons NO
[27]
in support of their challenge to the admissibility
of the evidence. As already noted, the applicants sought to
meet the challenge
by applying for the admission of the evidence in
terms of
s 3(1)(c)
of the
Law of Evidence Amendment Act.
Section
3(1)(c) permits the court to admit otherwise inadmissible
hearsay evidence (as defined
[28]
)
if, having regard to the factors set out in sub-paragraphs (i)-(vii)
of the provision, it ‘is of the opinion that such evidence
should be admitted in the interests of justice’. Section
3(2) of the Act restricts the effect of s 3(1) by making
it
clear that ‘[t]he provisions of subsection (1) shall not render
admissible any evidence which is inadmissible on any ground
other
than that such evidence is hearsay evidence’.
[36]
To the extent relevant in the current case,
the judgment in
O’Shea
merely
reiterated the court’s earlier decision in
Brown
& Hamer
, approving the decisions of
the Natal courts in
Simmons NO v Gilbert
Hamer & Co Ltd
, at first
instance,
[29]
and thereafter on intermediate appeal to the full court.
[30]
The judgments speak for themselves and it would be a
supererogation to rehearse their relevant content at any length.
Suffice it to say that their effect is to make it clear that the
evidence given at the Sarepta enquiry, which the applicants have
sought to employ in the current proceedings, is inadmissible against
the respondents. That much is impliedly conceded by
the
applicants, hence their application in terms of the Evidence Act.
[37]
The applicants sought to distinguish the
effect of
O’Shea
and the judgments that preceded it, relying for that purpose on the
obiter remarks of Rogers AJ (as he then was) in
Engelbrecht
NO and Others v Van Staden and Others
,
[31]
which queried, but did not decide, whether evidence that was
inadmissible by reason of the principles applied in the
O’Shea
and
Gilbert Hamer
cases
might not be admitted in terms of the
Law of Evidence Amendment Act.
In
that regard the learned judge stated (at para 20-21):
What is less clear is
whether they [i.e judgments in
O’Shea
and
Gilbert
Hamer
] also decide that such statements may never be received
into evidence against a third party, for example under the modern law
regarding
the admissibility of hearsay evidence as regulated by s 3
of the Law of Evidence Act 45 of 1988. The latter Act was not in
force
when
Gilbert Hamer
was decided. In
O'Shea
the
possibility of receiving the evidence as hearsay in terms of Act 45
of 1988 appears not to have been raised. In order for Act
45 of 1988
to be inapplicable one would have to conclude that provisions such as
s 65(5)
of the
Insolvency Act, by
expressly rendering the
evidence admissible against the witness himself, impliedly render the
evidence absolutely inadmissible
against any other party (an
inclusio
unius exclusio alterius
argument).
O'Shea
does not say so
in terms. The references in
Gilbert Hamer
and
O'Shea
(and
in the authorities reviewed therein) to privity of interest and the
circumstances in which admissions made by an agent are
admissible
against his principal suggest that the conclusion that the evidence
was inadmissible rested on the fact the evidence
was hearsay, which
in modern law is not an absolute bar to receiving the evidence.
Moreover in
Gilbert Hamer
Henning J, in a judgment concurred
in by the other members of the court, addressed as a separate issue
the question whether the
same evidence that Harcourt J had held
inadmissible was nevertheless rendered admissible by virtue of s 2 of
the Evidence Act 14
of 1962 (the predecessor of the current s 34 of
the Civil Proceedings Evidence Act 25 of 1965). The latter provision
provides a
limited exception to the hearsay rule. Although Henning J
found that the requirements laid down in s 2 of Act 14 of 1962 were
not
satisfied, the analysis undertaken by him would have been quite
unnecessary if the effect of Harcourt J's judgment had been that
the
evidence given at the insolvency enquiry was by a necessary
implication of the statute absolutely inadmissible. There is the
further consideration that although s 65(5) of the Insolvency
Act contains (as did s 155(2) of the 1926
Companies Act) an
express provision regarding admissibility in later proceedings
(including civil proceedings), the provisions of s 417 of the
Companies
Act 61 of 1973 (as they have read since their amendment in
2002) deal expressly only with later criminal proceedings. The
admissibility
or inadmissibility of such evidence in civil
proceedings thus appears to rest on general principles of the law of
evidence rather
on than the terms of the Companies Act.
I am thus inclined to think
that a court may in appropriate cases permit a litigant to rely on
evidence given by X at a s 417 enquiry
for purposes of making out a
case against Y provided this would be in the interests of justice,
having regard to the requirements
laid down in s 3 of Act 45 of 1988.
However I do not need to express a firm view on this issue.
In
a recent
judgment in a case closely related to the current matter,
Von
Wielligh Bester N.O. and Others v Merchant Commercial Finance and
Others
[32]
(the abovementioned case no.
16211/13
[33]
),
in which the admissibility of evidence adduced at the Sarepta
enquiry was also in issue, Griesel J was prepared to accept for the
purposes of argument the correctness of the obiter dicta in the
passage from
Engelbrecht
quoted above, but held that he did
not have to decide the point because there was no application in
terms of the Evidence Act before
him.
[38]
Mr
Dickerson
SC, who appeared with Mr
Smalberger
for Merchant Factors, submitted that ‘public policy’
considerations afforded a discrete basis, quite apart from the
hearsay rule, for the inadmissibility of the evidence.
Ms
Bernstein
,
who appeared for the first and second respondents, aligned herself
with Mr
Dickerson
’s
submission. If the argument were sound, it would point to the
court not being able to admit the evidence in terms
of
s 3(1)
of
the
Law of Evidence Amendment Act by
reason of the aforementioned
limiting effect of
s 3(2)
thereof.
[34]
[39]
As I understood his argument, Mr
Dickerson
relied on the provisions of s 417 and 418 of the 1973 Companies
Act as implicitly providing, in themselves, a prohibition
on the use
by the applicants of the evidence adduced before the commissioner at
the Sarepta enquiry. He placed special emphasis
on s 417(2)(b),
which, subject to the safeguards provided therein, abrogates the
substantive law right of a witness to refuse
to answer
self-incriminating questions and also on the privacy provision in
s 417(7). In addition, he emphasised the
sui
generis
, and in some senses potentially
draconian, nature of an examination in terms of the provisions.
[40]
The nature of and historical background to
such examinations and their equivalent in terms of the
Insolvency Act
were
discussed in considerable detail and with extensive comparative
reference to foreign jurisprudence in the Constitutional Court’s
judgments in
Ferreira v Levin NO and
Others; Vryenhoek and Others v Powell NO and Others
[35]
and
Bernstein and Others v Bester NO and
Others
.
[36]
The terrain having been well charted, it is not necessary for present
purposes to revisit the territory.
[41]
Section 417(2)
in its current form was
enacted to address the issues of constitutional incompatibility
inherent in the abrogation of the right
against
self-incrimination.
[37]
I do not think that the subsection has any bearing on civil
proceedings.
[42]
The history and rationale for the embargo
on the use of the evidence, other than with the leave of the court,
master or commissioner,
as the case might be, were described in depth
by Nicholas J in
S v Heller
.
[38]
It is plain that the provisions for secrecy in
s 417(7)
, and the
resultant limitation on the use of the evidence, are to promote the
achievement of the objects of the enquiry proceedings
[39]
and not for any other policy purpose. Once that purpose has been
served, or to the extent that the earlier release and use of the
evidence will not prejudice its attainment, the basis and the need
for such secrecy fall away. The record of any such enquiry
is
required in any event as a matter of law to be filed in the office of
the Master. There can be no doubt that at that stage,
at the
latest, it qualifies as the record of a public body within the
meaning of the
Promotion of Access to Information Act 2 of 2000
, and
is thus amenable to the wide right of access provided in terms of
s
11
of that Act. As there is no bar against such availability,
why should any restriction on the use of the information be implied?
I am unable to conceive of a plausible reason. In the current
matter the commissioner had consented to the use of the record.
[43]
I find nothing in the provisions, save as
expressly provided in s 417(2), that militates in principle
against the use of the
evidence adduced at such enquiries in other
proceedings to extent that the ordinary rules of evidence would
allow. This conclusion
appears to find support in the
observation of Ackermann J in
Bernstein
[40]
that the use of compelled testimony in
civil proceedings is not prohibited or held to be unconstitutional in
other open and democratic
societies based on freedom and equality.
[44]
As apparent from the judgments referred to
earlier, the effect of allowing the use of the evidence at subsequent
civil proceedings
has thus far been that the evidence has been
permitted to be used only against the examinee as a party or a
witness in such subsequent
proceedings. I agree with the
opinion expressed by Rogers AJ in
Engelbrecht
[41]
that the exclusion of its wider use would appear to have been founded
on the hearsay rule. For all these reasons I have concluded
that the evidence adduced at the enquiry is amenable to being
introduced in the current proceedings in terms of s 3(1)(c)
of
Act 45 of 1988, subject, of course, to the requirements of that
provision being satisfied.
[45]
The applicants’ counsel submitted
that the requirements of s 3(1)(c) had been met. Counsel
for the respondents
argued, that assuming their contention that the
provision did not apply did not prevail, its requirements had not
been satisfied.
In view of the conclusion adverse to the
applicants at which I have arrived assuming
ex
hypothesi
in their favour that the
evidence was admissible, I do not believe, especially in the context
of motion proceedings, that I need
to grapple with the question in
any detail. It cannot be in the interests of justice
exceptionally to admit evidence that
is
prima
facie
inadmissible if its admission
would not cure a fatal evidential deficiency in the case of the party
that seeks its admission.
The Evidence Act application will
therefore be dismissed. I also find it unnecessary to treat
with particularity of the sixth
respondent’s application to
strike out, with which the first and second respondents associated
themselves. It was by
and large the opposite side of the coin
in the context of the applicants’ endeavour to have the hearsay
evidence admitted,
being directed essentially at excluding the
evidence that the applicants sought unsuccessfully to introduce.
For that reason
I think it would be fair that the costs of both
applications should follow the result of the Evidence Act
application.
[46]
It remains to determine the application by
the applicants in terms of
s 18(3)
of the
Insolvency Act for
authorisation to have instituted these proceedings. The editors
of Meskin et al,
Insolvency Law
(LexisNexis) have ventured that ‘
[i]n the case of motion
proceedings… it is competent for the provisional trustee to
seek simultaneously both authority to
bring such proceedings and the
substantive relief’.
[42]
I have no quarrel with that postulate. The approach does,
however, carry the risk that should the application fail
the
provisional trustees may be personally exposed to the adverse costs
consequences. No doubt in most cases a prudent provisional
trustee would only take such a course after having obtained a
suitable indemnity from one or more of the insolvent’s
creditors.
[47]
It was held by Van Oosten J in
Warricker and Another
NNO v Liberty Life Association of Africa Ltd
,
[43]
that ‘[a]n applicant seeking the authority of the Court in
terms of the subsection must satisfy the Court, on good cause
shown,
that a departure from the normal course of events provided for in the
Act is warranted. Where the institution of proceedings
to enforce a
claim is contemplated, to be entitled to an order the applicant must
satisfy the Court, first, that some degree of
urgency exists;
secondly, that the cause of action which is to become the
subject-matter of the proceedings is
prima facie
enforceable;
and, thirdly, that the interests of creditors in the insolvent estate
will not be prejudiced by the earlier institution
of proceedings’.
The applicants have failed to satisfy me in respect of the second of
the aforementioned requirements.
The application in terms of
s 18(3)
of the
Insolvency Act therefore
also falls to be
dismissed.
[48]
In the result the following orders are made:
1. The
application for the admission of hearsay evidence in terms of
s 3(1)(c)
of the
Law of Evidence Amendment Act 45 of 1988
is
dismissed with costs, including the costs of two counsel, where such
were employed, and also the sixth respondent’s costs
in respect
of its application to strike out.
2.
The application for relief in terms of paragraphs 1, 3, 4, 5
and 6 of the notice of motion is dismissed with costs, including the
costs of two counsel where such were employed.
A.G. BINNS-WARD
Judge
of the High Court
Before:
Binns-Ward J
Dates
of hearing:
11-12 March 2014
Date
of judgment:
15 April 2014
Applicants’
counsel
A.R.G. Mundell SC
D.M. Davis
First
and second
respondents’
counsel
J.
Bernstein
Sixth
respondent’s counsel
J.G. Dickerson SC
A.M Smalberger
Applicants’
attorneys:
Korbers Inc.
Cape Town
First
and second
Respondents’
attorneys
Bernadt Vukic Potash & Getz
Cape Town
Sixth
respondent’s attorneys
Werksmans Attorneys
Cape Town
[1]
The provisions of
s 20(9)
are set out in
para [32], below.
[2]
See para [8], above.
[3]
In the applicants’ heads of argument, their case
was articulated thus: ‘
The basis for
the main relief is the contention that the Trust and Bella Densel
were the
alter ego
or instrumentality of Kaye, that the Constantia and Plettenberg Bay
properties were treated by Kaye as his personal assets and
used to
further his business interests without regard to the separate
identity of the Trust and Bella Densel
’.
[4]
Cf. e.g.
Brunette v Brunette and
Another NO
2009 (5) SA 81
(SE) and
Nedbank
Limited v Thorpe
[2008] ZAKZHC 72
(26
September 2008).
[5]
An illuminating analysis of the distinction is given in
an article by Professor Marius de Waal, ‘
The
abuse of the trust (or: “Going behind the trust form”)
’,
(2012) 76
The Rabel Journal of Comparative
and International Private Law
1078, which is
accessible at:
http://scholar.sun.ac.za/handle/10019.1/85023
.
[6]
The judgment of Moloi J in
Khabola
NO v Ralitabo NO
[2011] ZAFSHC 62
(24 March
2011) affords an example of a sham trust, notwithstanding that the
term is not used.
Brunette v Brunette
and Another NO
supra, which was decided on
the basis of a quasi-exception in the form of an objection to the
joinder of the trustees of certain
trusts to a divorce action on
amended particulars of claim, appears to instance an example of a
case in which the plaintiff would
seek to establish that property
purportedly vested in the trusts had in fact been the property of a
business partnership between
the spouses. Cf. also
BC
v CC and Others
2012 (5) SA 562 (ECP).
[7]
In his replying affidavit the first applicant confirmed
(at para 88) that ‘
It is not
contended by the applicants …that that JGN Trust was
“conceived in deceit”
’.
[8]
2010 (5) SA 555
(WCC), at para
32-42.
[9]
See
Land and Agricultural
Development Bank of South Africa v Parker and Others
2005 (2) SA 77
(SCA),
[2004] 4 All SA 261
, at para 19 and 26.
[10]
Cf.
Nieuwoudt
NNO v Vrystaat Mielies (Edms) Bpk
2004
(3) SA 486
(SCA),
[2004] 1 All SA 396
, at para 17.
[11]
Note 9, above, at para 37.
[12]
See the discussion on
Van
der Merwe
in Prof
A. van der Linde’s article,
Debasement
of the core idea of a trust and the need to protect third parties
2012 (75) THRHR 371
, in which it was argued that the court might
have found other ways (assuming that the evidence allowed it) to
avoid the obstacle
posed by the formalities prescribed in the
Alienation of Land Act 68 of 1981
in order to go behind the trust in
that matter.
[13]
2006 (2) SA 255 (SCA), [2006] 2 All
SA 363.
[14]
Subsection 7(3) of the
Divorce Act provides
insofar as
was relevant in
Badenhorst
:
A
court granting a decree of divorce in respect of a marriage out of
community of property-
(a)
entered into before the commencement of the
Matrimonial Property
Act, 1984
, in terms of an antenuptial contract by which community of
property, community of profit and loss and accrual sharing in any
form are excluded; or
(b)
…
may, subject to the provisions of subsections (4),
(5) and (6), on application by one of the parties to that marriage,
in the
absence of any agreement between them regarding the division
of their assets, order that such assets, or such part of the assets,
of the other party as the court may deem just be transferred to the
first-mentioned party.
[15]
Subsections 7(4) and (5) of the
Divorce Act provide
insofar as was relevant in
Badenhorst
:
(4)
An order under subsection (3) shall not be granted unless the court
is satisfied that it is equitable and just by reason of
the fact
that the party in whose favour the order is granted, contributed
directly or indirectly to the maintenance or increase
of the estate
of the other party during the subsistence of the marriage, either by
the rendering of services, or the saving of
expenses which would
have otherwise have been incurred, or in any other manner.
(5)
In the determination of the assets or part of the assets to be
transferred as contemplated in subsection (3) the court shall,
apart
from any direct or indirect
contribution
made by the party concerned to the maintenance or increase of the
estate of the other party as contemplated in subsection
(4), also
take into account-
(a)
the existing means and obligations of the parties, including …;
(b)
any donation made by one party to the other during the subsistence
of the marriage, or which is owing and enforceable in terms of the
antenuptial contract concerned;
(c)
any order which the court grants under
section 9
of this Act or
under any other law which affects the patrimonial position of the
parties; and
(d)
any other factor which should in the opinion of the court be taken
into account
.
[16]
In this respect the judgment in
Badenhorst
is starkly distinguishable from some of the examples cited by Lord
Sumption in his compelling analysis in
Prest
v Prest
& Ors
[2013] UKSC 34
,
[2013]
4 All ER 673
,
[2013] BCC 57
of how the Family Division of the High
Court of England and Wales had been given, misdirectedly, in several
judgments to piercing
the corporate veil by making asset transfer
orders in terms of 24(1)(a) of the Matrimonial Causes Act, 1973
against companies
in which one of the spouses had an interest.
In that regard para 37-38 of the judgment bear quoting in full
because they
assist, I think, to a proper understanding of the
approach adopted by the Supreme Court of Appeal in
Badenhorst
:
37.
If there is no justification as a matter of general legal principle
for piercing the corporate veil, I find it impossible to say that a
special and wider principle applies in matrimonial proceedings
by
virtue of section 24(1)(a) of the Matrimonial Causes Act 1973. The
language of this provision is clear. It empowers the court
to order
one party to the marriage to transfer to the other "property to
which the first-mentioned party is entitled, either
in possession or
reversion". An "entitlement" is a legal right in
respect of the property in question. The words
"in possession
or reversion" show that the right in question is a proprietary
right, legal or equitable. This section
is invoking concepts with an
established legal meaning and recognised legal incidents under the
general law. Courts exercising
family jurisdiction do not occupy a
desert island in which general legal concepts are suspended or mean
something different.
If a right of property exists, it exists in
every division of the High Court and in every jurisdiction of the
county courts.
If it does not exist, it does not exist anywhere. It
is right to add that even where courts exercising family
jurisdiction have
claimed a wider jurisdiction to pierce the
corporate veil than would be recognised under the general law, they
have not usually
suggested that this can be founded on section 24 of
the Matrimonial Causes Act. On the contrary, in
Nicholas v
Nicholas
[1984] FLR 285
, 288, Cumming-Bruce LJ said that it
could not.
38.
This analysis is not affected by section 25(2)(a) of the Matrimonial
Causes Act 1973. Section 25(2)(a) requires the court when exercising
the powers under section 24, to have regard to "the
income,
earning capacity, property and other financial resources which each
of the parties to the marriage has or is likely to
have in the
foreseeable future". The breadth and inclusiveness of this
definition of the relevant resources of the parties
to the marriage
means that the relevant spouse's ownership and control of a company
and practical ability to extract money or
money's worth from it are
unquestionably relevant to the court's assessment of what his
resources really are. That may affect
the amount of any lump sum or
periodical payment orders, or the decision what transfers to order
of other property which unquestionably
belongs to the relevant
spouse. But it does not follow from the fact that one spouse's worth
may be boosted by his access to
the company's assets that those
assets are specifically transferrable to the other under section
24(1)(a).
[17]
Jordaan v Jordaan
2001 (3)
SA 288
(C), on which the applicants also relied, appears to me to
have been decided on essentially the same basis that the SCA decided
Badenhorst
. The
order in that matter also did not go against the trusts, or render
their assets exigible.
[18]
[2008] NZCA 122
;
[2008] 3 NZLR 45
at
para 63-74.
My attention was
drawn to the judgment in
Wilson
courtesy
of the Rhodes University master’s degree thesis of R.B.
Stafford,
A Legal-Comparative Study of the
Interpretation and Application of the Doctrines of the Sham and the
Alter-Ego in the context
of South African Trust Law: The Dangers of
Translocating Company Law Principles into Trust Law
(December 2010), which can be accessed at
http://eprints.ru.ac.za/2123/1/STAFFORD-LLM-TR11-36.pdf
.
[19]
Note 9, above.
[20]
See s 7(2) of the Trust Property Control Act 57 of
1988.
[21]
2013 (3) SA 382
(WCC) at para 34.
[22]
[1993] ZASCA 167
;
1994 (1) SA 550
(A) at 566C –
F.
[23]
At para 34.
[24]
2007 (3) SA 34
(SCA),
[2007] 2 All
SA 602
, at para 11.
[25]
See para [5], above.
[26]
2012 (1) SA 90 (SCA); [2012] 1 All
SA 303.
[27]
1963 (4) SA 656 (A).
[28]
Section 3(4)
of the
Law of Evidence Amendment Act
provides
insofar as relevant:
For the purposes of
this section-
'hearsay evidence'
means evidence, whether oral or in writing, the probative value of
which depends upon the credibility of any
person other than the
person giving such evidence
.
[29]
1962 2 SA 487 (D).
[30]
1963 (1) SA 897 (N).
[31]
[2011] ZAWCHC 447
(6 December 2011),
at para 17-21.
[32]
[2014] ZAWCHC 16
(18 February 2014).
[33]
See para [11], above.
[34]
See para [35], above.
[35]
1996 (1) SA 984 (CC), 1996 (1) BCLR
1.
[36]
1996 (2) SA 751 (CC), 1996 (4) BCLR
449.
[37]
Section 417(2)
of Act 61 of 1973 currently provides:
(2)
(a) The Master or the Court may examine any person summoned under
subsection (1) on oath or affirmation concerning any matter referred
to in that subsection, either orally or on written interrogatories,
and may reduce his answers to writing and require him to sign them.
(b)
Any such person may be required to answer any question put to him or
her at the examination, notwithstanding that the answer
might tend
to incriminate him or her and shall, if he or she does so refuse on
that ground, be obliged to so answer at the instance
of the Master
or the Court: Provided that the Master or the Court may only oblige
the person in question to so answer after the
Master or the Court
has consulted with the Director of Public Prosecutions who has
jurisdiction.
(c)
Any incriminating answer or information directly obtained, or
incriminating evidence directly derived from, an examination
in
terms of this section shall not be admissible as evidence in
criminal proceedings in a court of law against the person concerned
or the body corporate of which he or she is or was an officer,
except in criminal proceedings where the person concerned is charged
with an offence relating to-
(i)
the administering or taking of an oath or the administering
or
making of an affirmation;
(ii)
the giving of false evidence;
(iii)
the making of a false statement; or
(iv)
a failure to answer lawful questions fully and satisfactorily.
Prior
to its substitution, in terms of
ss 9(c)
and
11
(a) and (b) of
the
Judicial Matters Amendment Act 55 of 2002
, the sub-section read
as follows:
(2)
(a) The Master or the Court may examine any person summoned under
ss
(1) on oath or affirmation concerning any matter referred to in that
subsection, either orally or on written interrogatories,
and may
reduce his answers to writing and require him to sign them.
(b) Any such person may be required to answer any
question put to him at the examination, notwithstanding that the
answer might
tend to incriminate him, and any answer given to any
such question may thereafter be used in evidence against him.
[38]
1969 (2) SA 361
(W) (with
reference to s 155 of the 1926 Companies Act, the statutory
predecessor of s 417 of the 1973 Companies
Act). The
Winding Up Rule 14 referred to in
Heller
has its equivalent
under the 1973 Companies Act in reg. 4 of the Winding-Up and
Judicial Management of Companies Regulations.
[39]
As to which, see, for example,
Bernstein
v Bester
supra, at
para 16.
[40]
Supra, at para 120. See also the learned judge’s
observation in
Ferreira
supra,
at para 154, that ‘
In the applicants'
written argument and in the oral argument on their behalf in this
Court, fleeting reference was made to the
fact that section
417(2)(b) was also inconsistent with the Constitution to the extent
that it permitted incriminating testimony
to be used in a subsequent
civil trial against the examinee. The argument was not pressed or
developed and no authority, academic,
judicial or otherwise, from
any jurisdiction, was cited in support of the contention. Nor was
any specific provision in the Constitution
relied upon in this
regard. I am unaware of any authority which would support such a
submission. It is therefore unnecessary
to express any view on it at
this stage, particularly since the issue was raised and more fully
argued in the Bernstein case
supra. If there is any merit in the
argument it will be dealt with in the Bernstein judgment
’.
Compare also
Cordiant
Trading CC v Daimler Chrysler Financial Services (Pty) Ltd
2005
(4) SA 389
(D)
at 393B-397 I
.
[41]
Note 31, above.
[42]
Op cit
at §6.6.1.
[43]
2003 (6) SA 272
(W) at 276H-J.